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Gothenburg : Tight supply is keeping rents on high level - Q4 2013

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A research produced by DTZ

Gothenburg : Tight supply is keeping rents on high level - Q4 2013

Recent data indicate that the Swedish economy has entered a more stable phase this winter. Sweden's GDP rose by 0.3% in the third quarter compared to the same quarter 2012. Growth is driven primarily by domestic demand, spurred by low interest rates and a strong housing market. Consensus forecasts suggest that the Swedish economy should pick up from 1.4% in 2013 to 2.7% in 2014.

There is normally a lag before general economic trends reaches the employment market. However, the confidence indicator for the private service sector in Western Sweden has risen 14 points since the trough in Q4 2012 and is now 1.5 point above the long term average. The expectations of taking on new staff are also rising but with a lag.

Construction activity was limited in 2013 bit it is now picking up speed. The vacancy rate is fairly low, at least in attractive locations. On the other side of the equation the economy is forecast to strengthen resulting in a renewed demand for offices in the years to come. However, office demand will come with a lag compared to the new supply. Based on this our short term forecast is for Gothenburg’s office rents to remain broadly stable.

In the medium term however, when economic growth starts to translate into new hiring we believe that office demand should strengthen further and support rental growth.

Source : DTZ (Groupe UGL)

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Keywords : DTZ